Pilgrims Pride

Project Report

Business Policy and Strategy

Submitted By

Faizan Amjad MBA-FA07-026

Hafiz Saeed MBA-FA07-029

Hammad Ahmed MBA-FA07-033

SUBMITTED TO

Mr. Javed Zaffar

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Pilgrims Pride

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Pilgrims Pride

AcknowledgmentAcknowledgment

All praises are for almighty ALLAH whose mercies are unlimited upon

us, and HE who graced us with knowledge and wisdom. Who’s provided

courage made us ambitious to learn the management of us and all that

us posses.

We are thankful to our teachers’ especially,

Mr. Javed Zafar who dedicatedly broadened our vision through his

ample experience and served as a lighthouse in this final project.

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Pilgrims Pride

Pilgrims Pride

History

The story began on October 2, 1946, when Aubrey Pilgrim and his partner, Pat Johns,

purchased a feed and seed store for $3,500 from W. W. Weems in Pittsburg, Texas. Soon

after forming the partnership, Aubrey asked his brother, Lonnie "Bo" Pilgrim, to join

them. Bo’s first job there was driving a feed store truck for 50 cents an hour.

In the early days, the Pilgrims would sell 100 baby chicks and a sack of feed to local

farmers who would take the chick’s home and raise them in their back yards, keeping

some for family needs and bringing back the remainder when they were grown.

"They would sell the chickens back to us, and we would turn them loose in a pen near the

store. e Pilgrim brothers faced a number of tremendous challenges in building their new

business.

"There was nothing remotely close to a long-range plan, a strategic plan, or a business

plan associated with Farmer’s Feed and Seed," Bo recalled in his book. "I doubt if there

was even very much time for daydreaming about a future. We were working long hours,

sometimes hauling a load of peas over to the Cass County Canning Co. in Atlanta, Texas,

not getting home until three o’clock in the morning, then getting to the store to open it at

seven o’clock. The fact is, it was all about survival. Survival meant meeting a customer’s

expectations so the customer would become a return customer." He soon learned not only

to survive, but also how make a business grow.

n the years ahead, the company continued to grow and thrive, purchasing Market Produce

of Fort Worth in 1969 and undergoing two name changes: Pilgrim’s Corporation and

Pilgrim Industries, Inc. Several other acquisitions followed, and on November 15, 1986,

Pilgrim’s Pride Corporation became a publicly owned company listed on the New York

Stock Exchange. One year later, the company expanded into Mexico.

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Pilgrims Pride

Company ProfileVision

“To be a World Class Food Company... Better Than the Best”

Mission

“Our Job Is Outstanding Customer Satisfaction... Every Day”

Pilgrim’s Pride Corporation is one of the largest chicken companies in the United

States and Mexico.

Our net sales in fiscal 2008 totaled $8.5 billion.

Pilgrim's Pride is currently ranked #304 on the Fortune 500 list of largest U.S.

corporations.

Pilgrim's Pride employs approximately 48,000 people in the U.S. and Mexico.

The company has major facilities in Texas, Alabama, Arkansas, Florida, Georgia,

Kentucky, Louisiana, North Carolina, Pennsylvania, South Carolina, Tennessee,

Virginia, West Virginia, Puerto Rico and Mexico, as well as other facilities in

Arizona and Utah.

The company has the capacity to process more than 45 million birds per week.

Pilgrim’s Pride owns and operates 35 chicken processing plants (32 in the United

States and three in Mexico) and 11 prepared-foods plants. Thirty-four feed mills

and 48 hatcheries support these plants.

Approximately 5,000 growers supply poultry for the company’s operations.

The company's further-processing facilities have the combined capacity to

produce 1.5 billion pounds of product per year.

Pilgrim’s Pride owns and operates five distribution centers in the United States

and 18 in Mexico.

The company's distribution center located near Pittsburg, Texas, features a state-

of-the-art, fully automated, 40-million-pound capacity freezer featuring RFID and

GPS technologies, allowing worldwide inventory tracking.

Plants in Mexico are strategically located to serve 75 percent of all Mexican

consumers.

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Pilgrims Pride

INTERNAL ASSESSMENT

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Pilgrims Pride

Market Positioning Map

The market positioning map clearly shows that the pilgrims pride has a better perception

in the mind of consumers because they are offering a high quality product at lower prices.

That is why there market standings are better than other companies. In the above figure

prices are measured on X-axis and quality on Y-axis. Where Pilgrims Pride is offering a

quality chicken products at lower prices.

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Pilgrims Pride

Revenue of Pilgrims Pride by Segments

The above chart showing the revenue of pilgrims pride by segment. Which clearly

showing that pilgrims pride are generating more of their revenues from fresh chicken

segment. After that their prepared food segment is very strong.

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Pilgrims Pride

Internal Factor Evaluation Matrix

Key Factors Weight Rating Score

STRENGTHS

Product Quality 0.15 3 0.45

Company Image 0.10 4 0.40

Production Capacity 0.09 3 0.27

Strong Distribution Channel 0.09 3 0.27

Energetic Product 0.08 3 0.24

Human Resource 0.07 2 0.14

Brand Reputation 0.10 3 0.30

Inventory Turnover 0.08 2 0.16

WEAKNESS

Financial Position 0.05 1 0.05

High Investment 0.06 1 0.06

Negative Publicity 0.05 2 0.10

Top Management Issue 0.04 2 0.08

Advertisement 0.04 2 0.08

Total 1.00 2.60

In the above table we have done the internal evaluation of the firm by taking some major factors as Strength and Weakness of the firm. After identifying the strength and weakness we assigned weight to them according to their importance. In rating column we assigned rate to each factor in this 1= Major Weakness, 2= Minor Weakness, 3= Minor Strength and 4= Major Strength. Then we multiplied the weight with rating and took the sum of score which is 2.60 which shows that the firm is performing above average.

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Pilgrims Pride

Income Statement

  2006(In $ Million)

Sales 7598.60

Cost of Goods Sold 7007.06

Gross Profit 591.54

Selling & Admin. Expenses 359.00

Non Operating Income 15.71

Interest Expense 125.76

Earning Before Taxes 91.61

Provision For Taxes 44.59

Income Before Extra Ordinary Items 47.02

Extra Items ---

Net Income (34.02)

The income statement shown above good financial position of Pilgrims Pride. In the year

2007 firm Net Income is 47.02 $ Million.

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Pilgrims Pride

External Assessment

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Pilgrims Pride

Pilgrims Pride Competitors

1. Tyson Foods

2. Perdue Farms

3. Bachoco

4. Mountaire Farms

5. Wayne Farms

6. Sanderson Farms

Market Share

The figure below showing that in broiler companies the market share of Pilgrims is 24%

which is greater than all the other companies. Their close competitor is Tyson Foods

which has a market share of 20%.

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Pilgrims Pride

Competitive Profile Matrix

Pilgrim Pride Tyson Foods PerdueSuccess Factors Weight Rating Score Rating Score Rating Score

Quality 0.22 4 0.88 3 0.66 3 0.66

Financial Position 0.15 1 0.15 3 0.45 2 0.30

Advertising 0.09 2 0.18 2 0.18 2 0.18

Market Share 0.10 4 0.4 2 0.20 1 0.10

Management 0.11 2 0.22 3 0.33 2 0.22

Technology 0.13 1 0.13 3 0.39 2 0.26

Global Expansion 0.10 4 0.40 1 0.10 1 0.10

Price Competitiveness 0.08 3 0.24 2 0.16 2 0.16

Customer Loyalty 0.12 2 0.24 2 0.24 2 0.24

Total 1.00 2.84 2.71 2.22

In the competitive profile matrix we compare the firm with its competitors by identifying

critical success factors. After identifying these factors we assign weight and rate them.

Then we multiply the rate with the weight. Then we take sum of all the score then we

compare the score in the above table Pilgrims score is 2.84 which is above average and

shows a better position than competitors.

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Pilgrims Pride

External Factor Evaluation Matrix

Factors Weight Rating Score

Opportunities

Forward Integration Start Fast Food

0.13 3 0.39

Entering into Beef Business 0.15 4 0.60

Business in Asia 0.12 3 0.36

Western Culture 0.10 2 0.20

Forward Contracts 0.09 2 0.18

Threats

Investor Hesitation 0.08 2 0.16

Brand Image 0.09 2 0.18

Strong Competitors 0.08 3 0.24

Higher Feed costs 0.07 2 0.14

Birds Diseases 0.09 3 0.27

Total 1.00 2.71

In the above table we have done the external evaluation of the firm by identifying some

factors as opportunities and threats of the firm. After identifying the opportunities and

threats we assigned weight to them according to their importance. In rating column we

assigned rate to each factor in this 1=Response is poor, 2= Response is average, 3=

Response is above average and 4= response is superior. Then we multiplied the weight

with rating and took the sum of score which is 2.71 which shows that the firm is

performing above average.

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Pilgrims Pride

BCG Matrix

The BCG matrix is use to to rank the business units (or products) on the basis of their

relative market shares and growth rates. Pilgrims pride lies in Cash Cows because they

have low growth rate but their market share is very high.

Recommendations

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Pilgrims Pride

After studying the whole case of pilgrims pride we suggest them the following

recommendations to pilgrims.

1. Firstly they go for a joint venture or merger with other company for the stability

of their business this will b useful for them to overcome the current problems. The

joint venture or merger can be with a company which is processing beef.

2. Secondly they do forward integration they have a great opportunity to start their

Fast Food Restaurants where they can sell their prepared energetic products.

3. They have a great opportunity in starting business in Asia because the chicken

consumption rate in Asia is very high and pilgrims pride have a great opportunity

to capture the market in Asia.

4. They can start beef business because there is a strong market of beef products and

their competitors is also more than 45% of their revenues from beef products.

5. They can do the forward contract with the feed suppliers to overcome the problem

of high feed costs.

Conclusion

Pilgrims pride is one of the largest chicken companies in United States and Mexico. It has

been serving the market since last 6 decades and has a biggest market share of 25% in

chickens. Firm has the ability to process more than 45 million chickens in a week and 12

billions chicken in a year. Pilgrim’s Pride owns and operates 35 chicken processing

plants (32 in the United States and three in Mexico) and 11 prepared-foods plants. Thirty-

four feed mills and 48 hatcheries support these plants. Pilgrims pride major customers are

KFC and Wal-Mart.

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